Investment deals top £100m at CBRE in first half of 2014

A bumper six months at property firm CBRE confirm growing investment in the North East, the firm said

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Quorum Business Park

The North East’s investment market is officially back in business with overseas and London-based investors fiercely competing to purchase stock at a rate not witnessed for years, according to leading property firm CBRE.

CBRE’s Northern Capital Markets team said it has completed over £100m of investment transactions in the North East and Yorkshire in the first half of 2014, a period which it believes demonstrates strong demand for most types of commercial property, especially single and multi-let industrial buildings and prime city centre offices. The first six months of this year have seen the Los Angeles-headquartered property firm CBRE, which has around 37,000 staff at more than 300 offices globally, seal deals including the sale of the iconic Pitcher & Piano bar on Newcastle Quayside for £7.55m.

The popular glass-fronted bar and restaurant was one of 20 UK Pitcher & Pianos in the Marston Group’s portfolio, generating an annual rental income of around £350,000 before it was put up for sale in January.

It was originally commissioned in 1995 by the Tyne and Wear Development Corporation and Amec Developments and was sold to a firm of London property investors, acting on behalf of a pension fund, in deal represents a net yield of 4.35% for pub chain Marstons plc – well above the £6.6m asking price.

CBRE also secured the sale of the 100,000 sq.ft Tesco Bank call centre at Quorum Business Park in Newcastle for £17.5m to an overseas investor.

Tesco Personal Finance Plc, trading as Tesco Bank, leased the 100,353 sq ft Grade A Q8 building in 2009 on a 15 year term and around 800 employees work from the modern ‘L’ shaped building with capacity to expand to over 1,500 people.

Robin Bullas, associate director of capital markets at CBRE Leeds, said: “Tesco Bank’s strong covenant in context with the overall prosperity of the Park proved to be a key factor in attracting investor interest.

“The deal provides a boost to the North East investment market and signifies the region’s ability to secure large deals such as this.”

Further deals included a £4.1m acquisition in Leeds, the disposal of 31,636 sq ft of offices fully-let to ISG Construction Limited in Cleckheaton to Aston Property Ventures for £4.9m and 5 Stonegate in York City Centre let to Joules, sold to a private investor for £2.2m.

This is welcome news for the region’s property sector which CBRE’s senior director of capital markets, Alex Whiting states has experienced five years of ‘slumber’. He said: “We are currently experiencing levels of investor interest not witnessed since before the recession.

“The improving economy across the north of England combined with the overheating London and South East investment market has focused investor interest on Yorkshire and the North East.

“The two significant North East transactions are incredibly positive news for the region and demonstrate that the investment market is definitely back in business.”